Neglecting Mindanao

THE CAT is out of the bag: the strong economic growth in 2010 and 2012 failed to pull many poor Filipinos from the poverty trap. Poverty incidence at the national level has remained unchanged. And that’s the good news! The bad news is that, by island territories, the improvement in the poverty situation after two years of the Aquino administration has been largely uneven: unchanged in Luzon, worse in the Visayas, and worst in Mindanao.

Poverty incidence which was quite serious in Mindanao from the very start, as shown in previous FIES surveys in the past, turned for the worse in 2012.

The proportion of the population who are below the poverty threshold was Very High in five of six Mindanao regions, ranging from 42% to 52.9%. And of the six regions, poverty has increased in 3 regions (Davao, SOCCSKSARGEN, and ARMM), has remained unchanged in one (Davao), and has declined in two (Zamboanga and Caraga).

The Autonomous Region of Muslim Mindanao (ARMM) registered the highest poverty incidence at 52.9% in 2012, up from 49.7% in 2009.

The highest poverty incidence in the country was observed in Lanao del Sur (74.4%) and Maguindanao (65.5%) — both from the ARMM.

The worsening poverty in Mindanao is due to the past and present neglect of Mindanao and the peace and order situation in the region. The dwindling and sputtering electricity supply has retarded growth in the region.

A cursory look at the list of Public-Private Partnership (PPP) projects would show that the majority of projects are located in the National Capital Region, the Calabarzon and in Central Luzon. Why? The bias against Mindanao in the provision of essential public infrastructure should be removed.

MOST POOR ARE IN RURAL AREAS

The recently released poverty numbers support the view that most poor are in rural, agricultural towns — not in urban centers. The proportion of the population who are poor in the National Capital region in 2012 was only 5.4% compared to the national average of 27.9%. This, by the way, was slightly worse than what was observed in 2003 at 3.95%.

This suggests that in order to improve the lot of most poor, the administration should focus on modernizing agriculture — on increasing farm productivity, higher public investment in farm productivity enhancing infrastructure, providing access to credit and clearing up the land ownership of agrarian reform beneficiaries.

Its easier and cheaper to create jobs in agriculture. Yet, this sector has been shrinking overtime and has been the slowest growing sector in recent years.

The government authorities should work for the revival of manufacturing in this country. We’ve given up too soon in supporting local industries.

Manufacturing has the potential of creating a lot of decent jobs for Filipinos. A large market — some 100 million Filipinos — should be enough incentives for Filipino entrepreneurs to invest in manufacturing.

Understandably, the necessary conditions for the revival of manufacturing are formidable. First, the government should commit to provide affordable, sufficient and reliable power supply. Electricity costs is higher in the Philippines than any other country in Asia.

Second, the government should mitigate the appreciation of the peso. A strong peso makes Philippine exports expensive and uncompetitive. At the same time, it makes imports more attractive than domestic production. Whenever we import, we create jobs abroad, and whenever we exports, we create jobs at home.

Third, the government should strive to reduce the cost of doing business in the Philippines. Start-up firms have been turned off by excessive costs due to bureaucratic delays.

Fourth, the government should be more effective in controlling smuggling. Illicitly traded goods directly compete with locally manufactured goods.

All these necessary conditions are the responsibility of a truly responsive and effective administration that’s committed to creating a lot of decent jobs for Filipinos at home. Without a serious, aggressive and doable job creation program, there is little hope that the poverty picture would improve when the next family income and expenditures survey is done in 2015.
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